Infosys ADRs crash 6% after Q2 results as revenue guidance cut spooks investors

The company cut its FY27 revenue growth guidance in constant currency terms to 1-2% from 1.5-3% earlier, signalling a more cautious outlook amid uncertainty over technology spending and the impact of artificial intelligence on the traditional IT services business.

Infosys reported consolidated revenue of Rs 49,244 crore for the July-September quarter, up 10.7% from Rs 44,485 crore a year earlier. Revenue in dollar terms stood at $5.19 billion, marginally above analysts’ estimates of $5.18 billion.

Net profit rose 6.2% year on year to Rs 7,823 crore from Rs 7,364 crore in the year-ago quarter. However, profit fell short of analysts’ expectations of Rs 7,929 crore.

The company’s large deal wins rose to $5.2 billion from $3.1 billion in the corresponding quarter last year, providing some support to its business outlook. About 62% of the deal value represented net new business.

Infosys’ AI-related revenue grew 29% sequentially and accounted for 10.5% of overall revenue. However, the growth in AI business has yet to translate into a stronger overall revenue outlook, as clients remain cautious about discretionary technology spending and increasingly focus on productivity gains.

The company retained its operating margin guidance of 20-22% for FY27, indicating that profitability remains a priority even as revenue growth moderates.

The guidance reduction comes amid broader concerns about the global IT services industry, where the adoption of generative AI is changing client spending patterns, pricing models and demand for traditional technology services.